ADT 2007 Annual Report Download - page 99

We offer a wide range of fire alarm and fire detection systems. These alarm and detection systems
include fire alarm control panels, advanced fire alarm monitoring systems, smoke, heat and carbon
monoxide detectors, voice evacuation systems and emergency lighting systems. We also offer a wide
range of fire suppression systems, the majority which are water-based sprinkler systems. In addition, we
provide custom designed special hazard suppression systems, which incorporate specialized
extinguishing agents such as foams, dry chemicals and gases, in addition to spill control products
designed to absorb, neutralize and solidify spills of hazardous materials. These systems are often
especially suited to fire suppression in certain manufacturing, power generation, petrochemical, offshore
oil exploration, transportation, data processing, telecommunications, commercial food preparation,
mining and marine applications.
We install fire detection and fire suppression systems in both new and existing buildings. These
systems typically are purchased by owners, construction engineers and mechanical or general
contractors. In recent years, retrofitting of existing buildings has grown as a result of legislation
mandating the installation of fire detection and fire suppression systems, especially in hotels, healthcare
facilities and educational establishments. We continue to focus on system maintenance and inspection,
which have become increasingly significant parts of our business.
Customers
Fire Protection Services’ customers include commercial enterprises, governmental entities, airports,
commercial shipping companies, fire departments, transportation systems, owners of petrochemical
facilities and homeowners. We market our fire detection and fire suppression systems to the majority of
these customers through a direct sales force.
Competition
Competition in the fire detection and fire suppression business varies by region. In North America,
we compete with hundreds of smaller contractors on a regional or local basis for the installation of fire
detection and fire suppression systems. In Europe, we compete with many regional or local contractors
on a country-by-country basis. In Asia, Australia and New Zealand, we compete with a few large fire
detection and fire suppression contractors, as well as with many smaller regional and local companies.
We compete for fire detection and fire suppression systems contracts primarily on the basis of price,
service and quality.
Flow Control
Our Flow Control segment designs, manufactures, sells and services valves, pipes, fittings, valve
automation and heat tracing products for the water and wastewater markets, the oil, gas and other
energy markets along with general process industries. The global flow control market is highly
fragmented, consisting of many local and regional companies and a few global competitors. We believe
we are the world’s leading manufacturer of flow control products. We believe our market share in the
global water, process, and energy-related markets is approximately 5%. With 2007 net revenue of
$3.8 billion, our Flow Control segment comprises 20% of our consolidated net revenue. In 2006 and
2005, net revenue totaled $3.1 billion or 18% of our consolidated net revenue and $2.8 billion or 17%
of our consolidated net revenue, respectively.
Strategy
We intend to further align with our customers’ needs by focusing our sales and marketing
resources along key vertical markets, including water and wastewater, oil and gas, food processing and
general industrial. We plan to continue expanding our product offerings through increased R&D
investments in developing technologies, as well as through selective acquisitions and partnerships. By
continuing to invest in our service and repair capabilities, we expect to capitalize on strong industry
2007 Financials 7